Popcorn Tax Not a Hit With Theaters
A new sales tax on concessions sold at movie theaters proposed yesterday by Mayor Vince Gray and the D.C. Office of Motion Picture and Television Development is the "first step" toward the construction of a multiplex east of the Anacostia River, the film office says.
Spokeswoman Leslie Green says that in the conversations her boss, Crystal Palmer, had with the National Association of Theater Owners (NATO) about building a new movie theater in Wards 7 or 8, the movie theater trade group said that in order to entice one of its members to commit to such a project the District had to come up with the financing.
"This is our solution to that," Green says of the proposed 5 percent surtax on items such as popcorn, soda, candy, and those little balls of chocolate-dipped ice cream. Currently, like concessions sold at other venues like stadiums and concert halls, the District's standard sales tax of 10 percent is built in to the listed prices of movie theater snacks. But movie theaters and some District policymakers are cool to the idea.
Yesterday, Josh Levin, who runs the West End Cinema, told Arts Desk that with customers already lukewarm toward concession prices, the prospect of having to collect an additional 5 percent sales tax "would impact us negatively." But with the cost of a combination of, say, a medium soda and a sack of popcorn big enough to last through the end of the first act, at $11, Green says that an additional 5 percent (55 cents in that example) "is not a lot in addition" to what a customer is already paying. Still, movie theaters say, the cost would be felt.
"It’s our feeling that a concession tax would be a disincentive to someone opening a theater," says Todd Halstead, NATO's deputy director of government affairs. "It is misdirected and unfair to tax movie theaters that contribute to the district’s economy to subsidize a direct competitor."
If the popcorn tax passes, the district intends to use 75 percent of the new revenue to incentivize one of the major movie theater chains to build a new venue east of the Anacostia. Though Green did not say what the expected revenue is, multiplexes don't come cheap. In September, NATO spokesman Patrick Corcoran told Washington City Paper in September that the average cost of building and opening a large movie theater is $1 million per screen.
The remaining 25 percent of revenue from the proposed tax would go to replenish the film office's production incentive program. Though under the proposed legislation the reimbursement rates for in-District expenditures would be lowered from 42 percent to 20 percent, Green confesses that the film office hasn't cut many checks at all in 2011.
"When this administration started we had $16,000 in the incentive fund," she says. Still, the 2011 fiscal year, which just ended, saw film and television productions spend over $20 million on goods and services in D.C., Green says. Fiscal 2012, she continues, is off to a decent start, with the schedule for November including another visit by the Baltimore-based HBO series Veep (set to debut next year) and a shoot for the Ben Affleck-directed spy thriller Argo. But although the incentive fund practically is empty right now, the film office is attracting visiting production companies with "quality service," Green says. "This is something that a lot of other states are battling as well, so they're not surprised when they say we don't have those incentives. It's great that they're still coming here."
Implementing the tax, though, may be a tall order. Council Chairman Kwame Brown referred the bill to the Small and Local Business Development Committee led by Vincent Orange, D-At Large, which oversees the film office, not the Finance and Revenue Committee led by Ward 2 Councilmember Jack Evans. Evans' turf, incidentally, is also home to several of the District's movie theaters, including Regal Movie Theatres at Gallery Place, AMC Loews in Georgetown, Landmark E Street Cinema, and West End Cinema.
Though he supports the idea of bringing a movie theater to Wards 7 or 8, Evans does not approve of raising sales tax on theater concessions, but he is learning about the proposal just now. "The executive branch has not given me any information on this," he says. "I think an additional sales tax is always a bad idea. It keeps people from buying things. I do support a dedicated funding source for our motion picture industry, but this is not the way to do it."
Evans, who calls sales-tax hikes "regressive" and "bad public policy," also says the District is on track for a budget surplus of $100 million to $150 million. "The city has plenty of money to finance the motion picture agency." But Evans, who was also vocally opposed to Gray's aborted idea to levy a 6 percent sales tax on theater and museum tickets, says the lack of communication between his office and the mayor's is nothing new, and that he'll be penning a letter asking why the popcorn tax bill was not referred to his finance committee.
"They were always criticizing the Fenty administration for not informing the Council what was going on. But here they are introducing a tax bill and nobody told me," he says.